The 1913 Underwood Tariff Act accomplished what?

• A. Lowered tariffs and imposed an income tax to compensate revenue loss
• B. Abolished the income tax
• C. Created a tariff-free zone for trade with Europe
• D. Raised tariffs and reduced the income tax

Answer: (A)

This question tests how the Underwood Tariff Act reshaped federal revenue by combining tariff policy with taxation. The act lowered many tariff rates, reducing the protective duties on imported goods. To make up for the expected drop in revenue from lower tariffs, Congress established a federal income tax, made possible by the era’s new constitutional leverage (the 16th Amendment). So the biggest impact was a trade-off: cheaper imports plus a new, centralized way to fund the government through income tax. It didn’t abolish the income tax, it didn’t create a tariff-free zone, and it didn’t raise tariffs.